Search, Nash Bargaining and Rule of Thumb Consumers

José Boscá, Javier Ferri and Rafael Domenech

No 901, Working Papers from International Economics Institute, University of Valencia

Abstract: This paper analyses the effects of introducing typical Keynesian features, namely rule-of-thumb consumers and consumption habits, into a standard labour market search model. It is a well-known fact that labour market matching with Nash-wage bargaining improves the ability of the standard real business cycle model to replicate some of the cyclical properties featuring the labour market. However, when habits and rule-of-thumb consumers are taken into account, the labour market search model gains extra power to reproduce some of the stylised facts characterising the US labour market, as well as other business cycle facts concerning aggregate consumption and investment behaviour.

Keywords: general equilibrium; labour market search; habits; rule-of-tumb consumers (search for similar items in EconPapers)
JEL-codes: E24 E32 E62 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2009-06
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-dge, nep-lab and nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Search, Nash bargaining and rule-of-thumb consumers (2011)
Working Paper: Search, Nash Bargaining and Rule of Thumb Consumers (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:iei:wpaper:0901

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